‘Their chemistry is undeniable,’ says an insider.

Art is imitating life for Naomi Watts and Billy Crudup: the stars, who play husband and wife on Netflix’s drama series Gypsy, have struck up a real-life romance! The twosome recently went public with their relationship, spotted walking hand in hand in New York City the weekend of July 15 and later laughing together over lunch. “Their chemistry is undeniable — it’s why they’ve got a hit show on their hands,” shares a source. “There was a spark the moment they started running lines.”

Things heated up quickly between the pair, who have known each other “for the better part of a decade” due to Billy’s friendship with Naomi’s former love of 11 years, LievSchreiber. According to the source, Liev and Billy, 49, have kept in touch since their involvement in the 2001 comedy Wet Hot American Summer and “Billy was always a welcome guest at Naomi and Liev’s home,” even hanging out with the couple’s two sons, Alexander, 10, and Samuel, 8, at times. “But there are no hard feelings. When Liev found out, he wasn’t that surprised. They always got on so well together.”

They only grew closer filming their show — a welcome respite for heartbroken Naomi. “Splitting from Liev was devastating for Naomi, and she just couldn’t see herself with anyone else,” the source says. “Then this fell into her lap, and she couldn’t be happier.”